Workers' compensation insurance is required for all California businesses that employ at least one person, and for all roofers, even if they are self-employed.
Every state has different requirements for workers’ compensation insurance. In California, though, the answer is clear. Workers’ compensation is mandatory for all employers, even if the company only has one employee.
Sole proprietors are generally not required to have workers’ compensation insurance unless they are a roofer. In that occupation, you are required to carry workers’ comp for yourself, even if you don’t employ anyone else.
California law requires a business owner to carry workers’ comp insurance for employees who regularly work in California, even if the business is headquartered in another state.
How many hours an employee works does not affect his or her entitlement to workers’ compensation. It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.
If a claim is filed, the burden is on the employer to prove that someone is an independent contractor and not an employee.
Self-employed workers typically don’t need workers’ comp coverage unless they are a roofer or in some other hazardous line of work. Whether or not you’re able to get workers’ compensation depends on the type of business and the ownership structure.
Regardless, if you’re self-employed, it’s a good idea to check with the California Department of Industrial Relations to determine what your rights and liabilities are so that you can be sure that you’re properly insured.
Failure to carry workers’ compensation insurance in California is a criminal offense. The penalties include:
If a worker is injured and the employer did not have workers’ comp, the employer could be liable for a penalty of $10,000 per employee at the time of injury if the case is compensable, or $2,000 per employee at the time of injury if that particular case was found to be non-compensable. The maximum penalty is $100,000.
Insurers in California determine workers’ compensation insurance costs based on the level of hazard of a particular occupation. Each occupation is assigned a risk classification based on two factors: frequency of injury and likelihood of severe injuries. The premium is higher for occupations with higher risks. Each occupation’s dollar amount is multiplied by 1% per $100 of the total payroll for that employee.
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Employers and employees are both protected by workers’ compensation settlements. California has created laws to streamline the process of making sure that an injured worker can quickly receive benefits, while the employer is protected from lengthy and expensive litigation and lost productivity.
California law requires coverage to provide basic benefits for:
Often, the employer, employee, and workers’ comp insurer can reach an agreement without difficulty. However, the California DWC Information and Assistance Unit can help settle disputes and guide the parties through litigation if an issue cannot be resolved any other way.
The California Department of Industrial Relations regulates workers’ comp insurance. California employers and workers can find resources for all aspects of workers’ compensation claims and laws through the agency’s Division of Workers’ Compensation (DWC).
Death benefits are an important component of workers’ compensation coverage in California. They provide:
Death benefits for dependents are determined by the number of dependents:
There are two types of workers’ comp settlements in California:
Stipulated findings and award. This is when the injured worker and the insurance company agree on the extent of disability and benefits, resulting in biweekly payments unless there’s a financial need for benefits to be paid upfront. The insurance company would continue to pay for future medical treatment. The injured worker might be able to reopen a case if the medical condition becomes worse within five years.
Compromise and release. An injured worker is paid a lump sum that closes the case. Any future medical care would not be covered, even if it is related to the injury.
Any settlement would need to be approved by a California workers’ comp judge. There’s often an informal hearing before the judge. Although the insurance company would handle this, it’s good for the employer to remain informed about the ongoing progress of settlement negotiations in case it becomes the subject of later litigation.
An injured employee has one year to file a workers’ compensation claim. California regulators can extend that time under certain circumstances:
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